Truss has made a slew of expensive promises including a plan to freeze household bills that could reach 130 billion pounds ($148 billion), as well as a package to help businesses with their energy bills that could cost £40 billion. On top of that, she’s promised more than £30 billion in tax cuts. Asked how she can afford her plans, Truss told Channel 5: “The UK has one of the lowest levels of debt as a proportion of GDP of G7 nations so we are doing well on that metric.”

Eoin Treacy's view

Politicians made big promises about what the future would be like after Brexit. Then Liz Truss made even bigger promises to ensure she won the leadership contest. Now the pressure is on to deliver and the answer is to spend, spend, spend.

The energy crisis injected additional urgency into finding solutions. This isn’t specific to the UK. Every European energy importer is in the same position. They have no choice but to spend without consideration for the sustainability of their debt burdens because the alternative is too dire to countenance.

UK Gilt yields continue to accelerate higher. The government’s debt/GDP ratio is going to exceed 100% as spending ramps up. The saving grace is the average duration of UK government debt is over 10 years. That’s also why yields are accelerating higher. The bulk of debt is in longer durations. Inflation is running wild and the Pound is trending lower. The dangers to one’s purchasing power in holding long dated bonds are obvious.

The competitiveness of the UK economy is going to be much improved by the decline of the currency. The best the government can do will be to streamline regulation, support domestic energy independence and do whatever is necessary to champion domestic innovation in manufacturing. The strength of the recovery will be fashioned during this recession.